Education cess not chargeable on automobile cess where levy and collection were not both by the Department of Revenue.

Education cess under Section 93 of the Finance Act, 2004 was held not leviable on automobile cess paid under the Industries (Development and Regulation) Act, 1951. The controlling circular stated that only duties levied and collected as excise or customs duties by the Department of Revenue are to be included for education cess computation. Automobile cess, though collected through Central Excise officers, was levied under a different statute by another Ministry, so the levy and collection requirements were not both satisfied. The demand was therefore unsustainable and was set aside.

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Issues: Whether education cess was leviable under Section 93 of the Finance Act, 2004 on automobile cess paid under the Industries (Development and Regulation) Act, 1951.

Analysis: The relevant board circular clarified that only duties which are both levied and collected as duties of excise or customs by the Department of Revenue are to be taken into account for computing education cess. Automobile cess was levied under the Industries (Development and Regulation) Act, 1951 through the Automobile Cess Rules, 1984, and was not a levy of the Ministry of Finance, Department of Revenue, even though its collection was routed through Central Excise officers. The legal distinction between the authority levying the cess and the machinery collecting it was material, and the departmental clarification was binding on the Revenue.

Conclusion: Education cess was not leviable on automobile cess, and the demand was unsustainable.

Final Conclusion: The appeal succeeded and the demand of education cess raised on automobile cess was set aside.

Ratio Decidendi: Education cess under Section 93 of the Finance Act, 2004 is chargeable only on duties of excise or customs that are both levied and collected by the Department of Revenue, and not on a cess levied under a different statute by another Ministry merely because its collection is administered through excise officers.

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